- US founding father knew paper fraud” money was only good for oppression and ruin commerce
- They were Bitcoin Hodlers and “they didn’t even know it”
Though we got crypto mom in the form of Hester Peirce and crypto dad in Christopher Giancarlo and a few others that support cryptos, regulators and officials around the world are still skeptical of digital currencies.
What about the founding fathers of the United States?
Would They Have Been HODLers or Bashers?
Jake Chervinsky, General Counsel at Compound Finance tries to find the answer to this in his latest Twitter thread where he says,
“Given their views on paper money, I get the sense they'd be hodling bitcoin.”
Thomas Jefferson and Benjamin Franklin were Bitcoiners and they didn’t even know it 🔥
— Pomp 🌪 (@APompliano) July 4, 2019
Let’s Print Money
To start with, before the American Revolution, different forms of money have been used such as metal coins, IOUs, personal lines of credit, and bills issued by banks and governments.
Then during the war, because the Congress (both Continental and Confederation) and the states didn’t have enough specie that is the metal coins to cover rising costs, they printed money. This money was backed by loans from individuals, banks, and foreign nations.
But they went overboard with their printing, no surprise there, more than the value of loans, this resulted in rapid inflation and government debt skyrocketing.
Hence, the saying,
“not worth a Continental.”
Now, after the war, the US had to repay its debts but Congress couldn’t force the states to contribute to national debt and citizens don't have enough specie to pay taxes.
So, Congress and many states decided to do what they do best,
“experimenting even more with paper money.”
Founding Fathers’ View on Paper Money
But looks like founding fathers were not keen on the idea of paper money.
“To emit an unfunded paper as the sign of value ought not to continue a formal part in the Constitution, nor ever hereafter to be employed..”
is what Alexander Hamilton, in June 1783 has to say about paper money.
Similar views of fraud and “knavery” on the paper issue had of George Mason’s who in 1785 said though it can be issued with one law,
“twenty laws will not make the people receive it.”
“Paper money is unjust; to creditors, if a legal tender; to debtors, if not legal tender, by increasing the difficulty of getting specie. It is unconstitutional, for it affects the rights of property, as much as taking away equal value in land.”
– James Madison, 1786:
George Washington had much to say, and was “decidedly against a paper emission.”
“Paper money has had the effect in your state that it will ever have, to ruin commerce, oppress the honest, and open the door to every species of fraud and injustice.”
– George Washington, 1787.
“This is a favorable moment to shut and bar the door against paper money,”
said Oliver Ellsworth, August 16, 1787, who also pointed out how it’s
“consequently depreciation keeps pace with the quantum of the emission; and articles for which it is exchanged.”
Thomas Jefferson, November 6, in 1813 talked about how it is “liable to be abused” and forever will be in every country in which it is permitted.
“I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.”
– Thomas Jefferson, May 28, 1816.
Jefferson already identified the problem “the banks” 200 years ago.
Maybe today, as Chervinsky puts it,
“we finally have the technology to solve it.”